Employers and business owners have several responsibilities and duties. Staff management, leave entitlements, and health safety responsibilities are just some of the things they need to do. All these things are only possible if an employer is efficient at record keeping. Why is record keeping important? And what are the things that employers need to record?
Importance of record keeping
Good record keeping ensures that employee’s remuneration and leave entitlements are correct and prevents misunderstanding between the employer and employee. Records can act as evidence and protect you and your employee if there is a problem. When you have records, you can make sure your employees are paid correctly and leave is taken as needed and as per entitlement. Records are useful during appraisals and performance management, for you to keep note of challenges and strengths. Importantly, it is a legal requirement that employers are able to show through written records that they have correctly given employees all minimum entitlements including the minimum wage and annual holidays.
For employers, records are documents they can rely on when needed. Employees have a right to know everything that is on record and they are also entitled to see their records if they ask for them.
Type of records
There are different types of records that you must keep and some you should keep as a matter of best practice. Peninsula works with business owners and employers in New Zealand offering them insights into optimum employment relations and health and safety. Call us on 0800234036 to learn how we can help you.
Mandatory information
- Employee name, postal address and age (if under 20 years old)
- Signed employment agreement including specific information (job description)
- Type of employment agreement- collective or individual
- Offer letter
- An employee-completed Tax code declaration
- Details of agreed wage payment
- Employment start date
Hours
Employers must keep records of hours worked by each employee, including the number of hours worked each day in a pay period and the pay for those hours.
- The hours worked on those days (including public holidays)
- Hours worked in different roles (only mandatory if employee performs different roles for different remuneration)
Pay
- Wages paid in each pay period and method of calculation
- Dates and payment for holiday, sick or bereavement leave taken
- Dates and payment for public holidays worked and not worked, if they were paid for that day
- Payment (including date of payment) and portion and value of annual leave cashed-up in each entitlement year
- All wage deductions, such as PAYE, student loan deductions, superannuation contributions, and any agreements for wage deductions
Leave
- Current entitlement to annual leave and sick leave
- Dates of alternative holidays taken or to be taken, and payment for any alternative holidays paid out
- Day or part of a public holiday agreed to be transferred, including relevant dates (only mandatory if applicable)
- Details of any Employment Relations Education leave taken
- Amount paid to the employee as holiday pay when they left the employment
- Records of the dates when employees are on unpaid leave and the reason for the unpaid leave. This information is necessary to assess whether an employee completed 12 months of continuous employment.
Health and safety
- Evidence of compliance with health and safety responsibilities
- Evidence of rest and meal breaks provided (or compensation for these)
- Evidence of health and safety training
How to keep records
Legally, employers are required to keep personnel files for at least six years and pay records seven years. The records can be electronic or on paper and should be in English. The records should be secure and can't be disclosed to another employee without a good and lawful reason. For example, you can share wage information with payroll.
Failure to keep accurate records
Employers who fail to keep accurate wage and time, holiday and leave records required as by the Employment Relations Act 200 and the Holidays Act 2003 could risk penalties. A Labour Inspector could issue an infringement notice, ordering you to pay money. Employees can even apply to the Employment Relations Authority (ERA) and they can order penalties against you for not keeping the right records.
Common mistakes with record keeping
Employers have so much to do that keeping records can take a back-seat or often be done in a rush. It is one of the most common things that business owners struggle with. If you're an employer, then here are some mistakes that you should avoid:
- Not updating records regularly- this should be done daily
- Only starting to keep records when there's an issue, someone's been overpaid or annual leave needs to be taken
- Not having enough information in your records to work out what an employee is owed when they leave your business
- Not having a clear description of a role to help with hiring, onboarding or performance management
- Not keeping employment files for long enough- you must keep details for at least six years from the date that the detail is about
- Not providing accurate and relevant details to payroll